Informing country risk assessment in international business

Adel AlKhattab, Jehad Saleh Aldehayyat, William Stein

Abstract

Abstract

In addition to assessment of commercial risks, when making decisions about assets or activities in other countries, multinational corporations also require to assess political risks such as the stability of government and potential changes in the treatment of non-domestic corporations. Environmental scanning is well covered in the literature. Although country risk assessment may be regarded as a specialist sub-set of environmental scanning, the sources of information in terms of independence, objectivity, accuracy, trustworthiness and absence of bias, to inform this process are not well explored in the literature. This study addresses this gap. We survey multinationals operating from Jordan and examine sources of information within a corporation-specific characteristics framework. The main findings are that multiple sources of information are used, of which internal sources are the most important, both personnel at headquarters and personnel abroad. Analysis of the survey data on the basis of corporation-specific characteristics revealed no significant correlations. There are implications for governments with regard to perceived reliability of the information they collect and make available to multinationals. There are also implications for multinationals in terms of resourcing of personnel, especially those based abroad, and a need for an awareness of the reliance often placed on such sources.

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